The Government will extend Australia’s FRCGW regime by increasing the CGT withholding rate for foreign tax residents from 10% to 12.5% from 1 July 2017. They have also reduced the CGT withholding threshold for foreign tax residents from $2 million to $750,000. While the rules are intended to address the issue of foreign residents disposing of properties, these obligations do still impact Australian residents. This is because Australian resident vendors will now need to complete the appropriate paperwork certifying they are not a foreign resident in order to avoid the purchaser withholding 12.5% of the contract price when they purchase a property for more than $750,000.
The clearance certificate can be completed online here and is required prior to settlement.